'The market is experiencing a shortage of quality opportunities to satisfy the level of demand from buyers'

Christie & Co: prices are remaining robust
Christie & Co: prices are remaining robust

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Neil Morgan, senior director of pubs & restaurants at Christie & Co, gives an insight into the state of the property sector now that restrictions have been lifted.

Having now passed ‘Freedom Day’ on 19 July, it has been exhilarating to see the licensed hospitality sector get back up and running. The number of businesses reporting a strong return to trading since all operating restrictions were lifted has demonstrated the significance that British people place on visiting pubs, bars and restaurants, underpinned by the successful vaccination programme and ongoing stimulus of government support. 

In the first half of 2021, operators were holding off coming to market in anticipation of this strong bounce back. As a result, the market is experiencing a shortage of quality opportunities to satisfy the level of demand from buyers ranging from experienced operators to new entrants, particularly for freehold assets in rural and coastal locations. Positively for sellers, this is helping to maintain prices and resulting in competitive bidding in some instances.

Prices remaining robust

At present, we are seeing prices remaining robust and where there is competitive bidding for prized assets multiples achieved are ahead of pre-Covid levels.

As we head into autumn, we expect this to shift, as the increased revenues over summer should give people more confidence to obtain a valuation and test the market. The huge pool of buyers will be hungry for these opportunities. 

This has been evidenced through the recent flurry of corporate activity, such as the news of Young’s selling majority of their 56-strong tenanted estate to Punch Pubs​ for a reported £53m. RedCat Pub Company, the investment vehicle set up earlier this year by former Greene King chief executive, Rooney Anand has also been busy in acquiring a number of individual as well as pub portfolio opportunities. 

During August, the company acquired the Leicestershire-based Little Britain Pub Company. Completed on a highly confidential basis, the five-strong collection of pubs set to join the RedCat family includes the Windmill in Wymeswold, the Curzon Arms in Woodhouse Eaves, the Blue Bell in Rothley, the Crown Inn in Old Dalby, and the Langton Arms in Church Langton. 

Private equity

Private equity investors have been particularly attracted to pub hotels in popular rural and coastal tourist locations, likely due to the strength of the UK staycation market, which is expected to persist.

At Christie & Co, we have also experienced unprecedented interest for individual sales since the start of the year, which has culminated in the sale of over 220 hospitality businesses year to date, and we anticipate this frenetic individual and portfolio transactional activity to continue throughout the remainder of 2021. Buyers continue to outstrip sellers, making it an ideal time to think about coming to the market, to take advantage of these conditions.

The team are currently advising on a number of exciting portfolio transactions which we hope to announce over the coming weeks and months. 

Neil Morgan, senior director of pubs & restaurants, Christie & Co

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